India and Russia -1 $billion Line of Credit to Russia’s Far East Region (REF) - Seeker's Thoughts

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India and Russia -1 $billion Line of Credit to Russia’s Far East Region (REF)

India and Russia have been traditional allies, and the equation almost remains stable. However, India has included Russia in the ‘Act Far East’, therefore, the ‘Look East, Act East’ policy emphasizes upon building ties with Russia.

In September 2019, the Indian prime minister Narendra Modi pledged on Thursday to extend a 1 $billion Line of Credit to Russia’s Far East Region (REF).

The Easter Economic Forum in Vladivostok, set up by Russian President Vladimir Putin is to attract the investment to the underdeveloped region of Russia.

Russia’s the Far East has strategic prominence, as the region has energy resources. The region also has trade routes which are accessible due to global warming.  

China’s cross-border investment in RFE accounts for 71% of the total direct foreign investment of $33 billion, therefore, India’s efforts are seen as India’s attempt to keep traditional friend’s ties as well balancing the equation between Russia and China.

In 2018 alone, India has done the defence deal for $14.5 billion from Russia. India and Russia both have agreed on a ‘five-year roadmap’ for cooperation on prospecting for hydrocarbons and LNG in the Far East and the Arctic, building on a history of Indian investment in oilfields in the region.
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The government has said it welcomes cooperation with other countries for investments in RFE, notably Japan, which has in the past few years warmed up to Russia, despite their bitter territorial dispute in the region.

 India and Russia conduct a bilateral summit annually. Both countries discuss a range of regional and global issues during that summit.  One of the most advanced’ air defence system the S-400 Triumf Missile deal was also signed, when Puttin visited India during the summit. 

History of India and Russia relationship 

India- Russia relationship has evolved into an equal partnership. The deep roots of this relationship go back to the early 20th century when India was under British rule and Czars ruled Russia. 

The Russian revolution of 1905 inspired Indian freedom fighters. Mahatma Gandhi was also struck by the similarity in the prevailing conditions in Russia and India.

Following the 1917 Bolshevik Revolution, soviet leaders understood that their revolution stood a better chance to succeed and their revolution encouraged India to become free and independent.  

It was Pandit Nehru's thinking which laid the foundation of the friendly policy of the Indian National Congress towards the Soviet Union. After visiting the Soviet Union in 1927, Nehru got inspired by the Soviet experiment.

He was convinced that a poor developing country like India needed to flow not the capitalist path but a development model that emphasized social justice, equality, and human dignity.
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It is noteworthy that even before India become independent an official announcement was made soon 13 April 1947 on the establishment of diplomatic relations between India and the Soviet Union. 

Since then India and Russia have been the balancing force in this realignment of global powers. Both countries are in a position to influence geostrategic politics with regard to sanction on Iran, the middle equation, tariff manipulation, terrorism, and several other issues. 

Russia has supported India's demand for a permanent seat at the UN security council. Russia also helped India attain full membership of the Shanghai Cooperation Organisation (SCO). Russia also supported India's entry into the exclusive club of the Nuclear Supplier Group (NSG).

Russia’s support and assistance 

India received generous assistance for its industrialization as well as for development in the areas of defense, space and atomic energy. During times of economic struggle, India appreciated the support in form of low-priced economic credits for infrastructure projects repayable in rupees; reliable affordable and good quality military equipment supplies, also on credit and supply of crucial products like oil and oil products, fertilizer, metal, etc. 

Some of India's globally completive public sector companies like BHEL, Oil and Natural Gas Corporation (ONGC) and Hindustan Aeronautics Limited (HAL), as well as the steel industry in India, were set up with soviet cooperation. 

The first Indian Institute of technology set up with foreign collaboration was the one in Mumbai with Russia's support. Russia helped India in many ways to become more self-reliant a was a true partner of India. 

Cooperation in nuclear-sector 

In the nuclear sector, Russia has already constructed two nuclear power plants at Kudankulam in South of India under the Indo-Russian nuclear cooperation program. Negotiations for two additional units on the same site are also going on.  

Cooperation in the space sector 

India –Russia cooperation on Glonass which is a global navigational satellite system it’s a Russia's  GPS (global positioning system). India is also trying to get Russian technology in tracking the satellite and to have a collaborative chandryaan II, project involving space probes to the moon. 

Energy cooperation  

India- Russia energy cooperation is also expected to get a boost in the coming years. India imports oil, mostly from the volatile region of the Middle East. However, to sustain the current rate of growth. India need to secure and diversify sources of energy import. 

According to the International Energy Agency, India would be the third largest energy consumer in the world by 2025 after US and china. Russia, India's trusted strategic partner is destined to play a vital role in ensuring India's energy security in the coming decades.

Cultural ties 

There is a strong tradition of Indian studies in Russia. Apart from Hindi, language such as Tamil, Marathi, Gujarati, Bengali, Urdu, Sanskrit and Pali are taught in Russian institutions.   
There is a general interest among Russian people in Indian dance, music, yoga and Ayurved. There are regular cultural initiatives to promote people –to-people contacts between India and Russia. 

Weak trade between India-Russia 

Trade between both the two nations is extremely low. The weakest link in India-Russian cooperation's remains trade and economic ties. 

Make in India initiative would welcome Russian companies from the public and private sector, and companies of both the countries have shown a willingness to invest and  engaged in boosting- up the economic partnership with each other, and trying to give a new direction to the economic relationship. 

Major infrastructure projects such as dedicated freight corridors and industrial cluster, smart cities, and engineering services, sharing technologies and skills are also areas to enhance cooperation. 

Strain in the relationship 

The first of the concern is rapidly expanding ties between and India and USA, which started with the India US Nuclear deal in 2008. 

Other concerns the growing defence relations between USA and India. Russia's decision to supply Pakistan with Mi-35 hind attack helicopters has alarmed the Indian defense establishment. 

The Russia- Pakistan joint exercises along with the U.S  and has signed logistic agreements which can eventually give the US access to Indian naval bases. Russia had proposed a Russia-India-China forum. India is hesitant about this because of the unresolved issues with china. 

Why India needs Russia? 

Russia can be a major market for India industry such as pharmaceuticals, manufactured goods, diary products, bovine meat and frozen seafood.

 Geopolitically, Russia continues to be a balancing force against any designs China and Pakistan may have in the Indian region. India can also meet its abundant energy requirements at a cost effective price with the help of Russia.

Despite expanding its defense purchases from the US, Israel and Europe, India still needs to collaborate with Russia. 


Both India and Russia reaffirmed their intention to expand the scope of such collaborations in different fields. 
This would give better opportunities for expanding mutual capabilities. Both countries are emphasizing to boost the trade. 

There is a need to create balanced relationship approach. It is clear that India-Russia relations remain vital for both countries to maintain global security environment. 

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